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China Stocks Investors Turn to Laggards

After a long and strong rally, China stocks are struggling to sustain significant gains, but sentiment is too good to allow the market to lose ground. Attention is turning laggards like smaller Chinese properties as investors digest big gains.

On Tuesday a money-loosening move by the Bank of Japan helped the Hang Seng Index in Hong Kong edge 0.3% higher to 23,659, the best close in 19 ½ months. The index jumped 22.9% in 2012 and 2.9% on the first day of trading this year, but has traded in a narrow range in steady-to-declining turnover for the last three weeks. The index of Chinese companies rose 0.6% Friday to 12,197

The market is likely to continue to move sideways in the short term, according to Jackson Wong, vice president of sales at Tanrich Securities.

“Although the sentiment is still relatively positive here, the profit taking mood is coming in especially with the shrinking turnover, so expect more choppy trade this week,” he told Equities in an email.

Most of the gains in the big rally have gone to the big names, Wong said, and now investors are turning to laggards like second and third-tier Chinese properties. Among them are Renhe Commercial (1387, HK), Coastal Greenland (1124) and SRE Group (1207, HK). China coal stocks, which are lagging the market, should also do well, Wong said. End

Chinese Stocks in the U.S.: +3.1, 408.4, 1-18-13, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong posted a small gain as the Bank of Japan introduced monetary loosening measures. Investment and construction company Shenzhen International (0152, HK) soared 21.1% on news it was engaged in land-use negotiations with the local government. KGI Research

Quotable: "With very few economic data due next week, investors are likely to turn their attention to US corporate earnings. Some US tech leaders like Apple, Google and Microsoft will announce their fourth quarter earnings next week. Given the upbeat investment sentiment, Hong Kong shares may test the 24,000 level in the coming week." BEA Securities. 1-18-13

Chinese Company to Watch: Great Wall Motor (GWLLY) "Better than expected results was mainly due to the good market response to the new automobile models launched, resulting in an increase in the sales of the Company’s automobiles." KGI Asia. 1-22-13

Brokerages and analysts cited here have disclaimers on their websites emphasizing their statements are for information only. They do not endorse my blog, and I don’t endorse them.

For a list of Chinese companies sold in the U.S. and information on each company go to http://www.adrbnymellon.com/dr_country_profile.jsp?country=CN

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